Spring Statement 2026: What it means for your business

Earlier this month, Chancellor Rachel Reeves delivered the Spring Statement to the House of Commons. As expected, it wasn't a major tax event, no new headline taxes were announced, and the focus was on economic forecasts rather than policy changes.

But that doesn't mean nothing is happening. Several important changes confirmed at the Autumn Budget are now just days away from taking effect. And since the Spring Statement was delivered, the economic landscape has shifted significantly.

Here's our breakdown of what matters most and what you should be reviewing before 6 April.

The Economic Outlook and the Impact of the Iran Conflict

The Office for Budget Responsibility (OBR) has revised its growth forecast for 2026 down to 1.1%, reflecting weaker-than-expected GDP figures from late 2025, rising unemployment, and subdued business sentiment. Inflation was expected to ease to around 2.3% this year.

However, those forecasts were finalised before the escalation of the US-Israeli strikes on Iran on 28 February. Since then, the picture has shifted considerably.

Oil prices have risen above £80 per barrel following disruption to shipping through the Strait of Hormuz, and European gas prices have nearly doubled. The Bank of England held interest rates at 3.75% on 19 March, warning that the conflict is delivering a fresh inflation shock to the UK economy. Rising energy costs are expected to add around 0.75 percentage points to inflation later this year, and the prospect of interest rate cuts which many businesses had been hoping for has been pushed back.

The Prime Minister has warned that the conflict could hit "every household and every business" in the UK, and the government has begun discussing support measures for those most exposed to rising energy costs.

For business owners, this reinforces the need for strong financial planning. Rising energy and input costs, combined with frozen tax thresholds and higher employer NICs, mean margins are being squeezed from multiple directions. Keeping your books up to date, reviewing your cost base, and making sure you're claiming every allowable expense has rarely been more important.

Dividend Tax Rates are Increasing

The dividend allowance remains at £500 per year, meaning most dividends taken from your company will be subject to tax.

For the current 2025/26 tax year, dividend tax rates are:

• 8.75% (basic rate)

• 33.75% (higher rate)

• 39.35% (additional rate)

From 6 April 2026, rates are increasing by 2 percentage points:

• 10.75% (basic rate)

• 35.75% (higher rate)

• 39.35% (additional rate remains unchanged)

For a director drawing £50,000 in dividends at the higher rate, this means roughly £600 more in annual tax. At £100,000, the increase is around £1,400.

If you're an owner-managed businesss, now is the time to review your salary and dividend mix. In some cases, it may be worth considering whether to bring forward any dividend payments before 5 April. Speak to us before making any changes.

The Stealth Tax: Frozen Allowances until 2031

The Personal Allowance has been frozen at £12,570 since 2021. The higher rate threshold is stuck at £50,270. National Insurance thresholds are frozen too. And at the Autumn Budget, the Chancellow confirmed this freeze will now extend all the way to April 2031, three years longer than originally planned.

This is known as fiscal drag. As wages rise, even just to keep pace with inflation, a larger proportion of your income falls into higher tax bands. You're paying more tax without any rates actually changing.

In real terms:

• If you earned £48,000 in 2021, you paid basic rate tax. If you now earn £52,000, you're a higher rate taxpayer even though your lifestyle hasn't changed

• If your employees have had pay rises, their take-home pay hasn't increased as much as they think

• As a business owner, your own salary and dividend strategy may need revisiting

With energy costs now rising again due to the Iran conflict, the squeeze is being felt from both sides costs going up while frozen thresholds mean more of your income is taxed.

There are practical steps you can take: reviewing pension contributions, using salary sacrifice schemes, and optimising the timing of income around tax year boundaries. But it requires someone who's actively looking ahead not just filing last year's numbers.

Child Benefit: The High Income Charge that Catches People Out

If you or your partner earn over £60,000 and your household claims Child Benefit, you may already be affected by the High Income Child Benefit Charge (HICBC). Many families don't realise it until they receive an unexpected tax bill.

Here's how it works:

• If the higher earner's adjusted net income exceeds £60,000, you start repaying 1% of the Child Benefit received for every £200 of income above the threshold

• At £80,000, the full amount is clawed back

• The charge is based on individual income, not household a couple each earning £59,000 (£118,000 combined) pays nothing, while a single parent on £61,000 would owe the charge

Two things most people don't know:

1. You can reduce or eliminate the charge with pension contributions. If your adjusted net income is £70,000 and you put £10,000 into your pension, your income drops to £60,000 the charge disappears and your pension grows.

2. Always keep your Child Benefit claim active. Even if you earn over £80,000 and would repay the full benefit, the non-working or lower-earning parent receives National Insurance credits that count towards their State Pension. Opting out could cost thousands in lost pension over a lifetime.

Capital Allowances Still Favour Investment

The government continues to encourage business investment through capital allowances. Companies can still benefit from full expensing, allowing qualifying plant and machinery purchases to be deducted from taxable profits in the year they're bought.

For businesses planning equipment upgrades or investment in assets, this can significantly reduce corporation tax liabilities. In the current economic climate, where costs are rising, making the most of available reliefs is more important than ever.

Making Tax Digital is Days Away

The biggest structural change approaching for many self-employed individuals and landlords is Making Tax Digital for Income Tax (MTD for ITSA).

From 6 April 2026, the rules apply to individuals with self-employment or porperty income totaling over £50,000. Instead of a single annual Self Assessment return, affected taxpayers must:

• Maintain digital records using MTD-compatible software

• Submit quarterly updates to HMRC

• File an End of Period Statement and final declaration

The threshold falls to £30,000 from April 2027, bringing many more taxpayers into scope.

Missing an MTD deadline triggers penalty points. Once you accumulate 4 points, you face a £200 fine and repeated non-compliance can lead to further penalties and interest.

As a certified Xero partner, we help clients move to compliant digital bookkeeping including system setup, migration, and ongoing quarterly submissions. If you're unsure whether MTD applies to you, get in touch and we can check.

Quick Year-End Checklist (Before 5 April)

With the end of the tax year approaching, here are a few things worth reviewing:

• Use your £20,000 ISA allowance before it resets

• Consider pension contributions and available carry-forward relief

• Ensure all allowable business expenses have been recorded

• Reconcile your accounts and gather outstanding receipts

• Review whether your current business structure is still tax efficient

• Consider whether to bring forward any dividend payments vefore the rate increase

• Review your energy costs and factor rising prices into your cash flow forecasts

Even small adjustments before the tax year closes can make a meaninful difference.

What We're Watching Next

The next major fiscal event will be the Autumn Budget later this year, where larger tax policy changes are more likely to be announced.

In the meantime we're watching:

• The ongoing Making Tax Digital rollout

• The economic impact of the Iran conflict on UK energy prices, inflation and interest rates

• Possible government support measures for businesses affected by rising costs

• HMRC's continued investment in digital compliance and data monitoring

As always we're keep you updated as soon as anything important changes.

Questions?

If you'd like to review your bookkeeping, tax planning, or MTD readiness before the new tax year begins, we'd be happy to help.

Book a free discovery call at www.beyondbookkeeping.app